EMD SD-60 3,800hp good condition well maintained
$275,000 to $350,000
lease $325 to $375 per day
------------------------------------------------------
GE Dash 8-40CW 4,000hp good condition well maintained
$250,000 to $275,000
Lease $175 to $200 per day

I find this interesting I wonder what makes the sd60 so much more valuable?

We all know the reputation of the SD-40s as historically being one of, if not the best in the opinions of railroads and engineers, but there will always be a market for dependable 4 axle power for short lines and locals. I know my areas Class 1 must have a 4 axle on the local, because industry track will not handle 6 axle power. This may explain the high cost for good 4 axle power.

if [ cefx ] for example, when they bought thoes ac4400s payed [ just a number ] 1,000,000.00 per unit. and they lease them out at 500.00 per day. that means it takes 2000 days just to make back the cost of the loco. thats almost 6 years and only if they lease it evey day for that almost 6 year period. and then there is the maintnince and any repairs to the unit in that time frame. so when does the lease co realy make money on any unit that they have.

Date: 06/22/08 17:19Re: some one please explane this to me
Author: Lackawanna484

highhood Wrote:
-------------------------------------------------------
> if [ cefx ] for example, when they bought thoes
> ac4400s payed [ just a number ] 1,000,000.00 per
> unit. and they lease them out at 500.00 per day.
> that means it takes 2000 days just to make back
> the cost of the loco. thats almost 6 years and
> only if they lease it evey day for that almost 6
> year period. and then there is the maintnince and
> any repairs to the unit in that time frame. so
> when does the lease co realy make money on any
> unit that they have.

The leasing company also has the benefit of depreciation for book value purposes. That lets them write off a portion of the purchase price against taxable income from other investments, etc. In the simplest terms, depreciation lets you subtract 6% to 10% of the purchase price each year to recognize the wear and tear etc on the capital asset. By year 10 or 15, your asset might only have a book value of 10% of its purchase price, even though its resale value might be much higher.

The leasing company likely borrowed money from a bank or insurer or a partnership to purchase the locomotive, so they owe (tax deductible) interest on the loan, as they collect lease income from the railroad.

I'm sure there are people who understand the process better than I do, but the general idea is the leasing company uses borrowed funds to acquire the loco, and passes the income from the leases back to the investors. When the loco is used up for accounting purposes in 15 years, the any profit (sales price minus the accounting book value left) is taxed at a favorable rate.

Most farmers, truckers, airlines, construction firms, and other heavy equipment users have similar financing strategies.

EMD SW1500 1,500hp good condition well maintained
$120,000 to $150,000
Lease $75 to $125 per day
------------
I left off zeros when I typed. Could not copy and paste as RA did have some GP's with 6 axles.

I don't believe any decent switcher these days can be had for under $200,000; a well-worn rent-a-wreck sitting in a used locomotive junkyard somewhere maybe, but the component values are over $125,000 in most cases. "Well maintained" doesn't mean much. There are several well maintained SW-1500's for sale by the CRANDIC for over $300,000; I know that they are well maintained because I have dealt with them and the CRANDIC has the reputation of beinbg a first class operation.

I have purchased a "nice" SW1200RS (from LTEX)and an immaculate SW-900 (from the CRANDIC) in the past two years and paid $185,000 and $250,000 respecively for quality power. I didn't like the price but the alternative was keep patching and praying.

pal77 Wrote:
-------------------------------------------------------
> EMD SD-60 3,800hp good condition well maintained
> $275,000 to $350,000
> lease $325 to $375 per day
> --------------------------------------------------
> ----
> GE Dash 8-40CW 4,000hp good condition well
> maintained
> $250,000 to $275,000
> Lease $175 to $200 per day
>
>
> I find this interesting I wonder what makes the
> sd60 so much more valuable?

Same reason so many GP9's, SD9's, SD40's, GP40's, SD45's, FP45's, GP38's, SD38's, SW's of all types, etc. are all still running and even rostered by Class I's still while the competitor U-boats are long gone. EMD long term reliability has simply been much better.

How much does a new SD70M go for? If remanufactured SD40-2's (which I presume should have like-new low maintentance costs and reliability) can be had for 750K and a set of 4 for 3M I'm not sure I see the economics behind the 3 for 4 replacement even with the fuel savings.

nischik Wrote:
-------------------------------------------------------
> Pal 77 wrote: I find this interesting I wonder
> what makes the sd60 so much more valuable?
>
> The answer is simple: any EMD locomotive lasts
> twice as long and a comparable GE engine. It's all
> in the trade-in value.

I suspected as such given EMD reputation, but I had thought that GE had significantly closed that gap with the Dash 8 series. Makes me wonder how many mechanical dept that opted heavily for GE products in the late 80's early 90's are questioning that decision.